Hope you are doing well and staying safe. Welcome back to our brief thoughts on ESG. This short week I want to share five interesting resources from the financial community to show how the conversation around ESG topics is evolving throughout this pandemic. I will highlight what I think are the most revealing quotes from them.
- “Our actions during this global crisis are essential to keeping the global economy going and will be remembered for years to come.”
- “I want to focus on what we as a bank can do to remain strong, resilient and well-positioned to support our colleagues, clients, customers and communities across the globe.”
- “It is in the toughest of times that we need to use our capital and liquidity to help clients – large and small.”
- “During this pandemic, we have also taken extensive steps to protect and support our employees and their families.”
- “A DIVERSE AND INCLUSIVE COMPANY IS A STRONGER COMPANY”
- “We make extraordinary efforts to lift up our communities, especially in challenging times.”
- “This can be a moment when we all come together and recognize our shared responsibility, acting in a way that reflects the best of all of us.”
WEF on Stakeholder Principles in the COVID Era
- “We will continue to embody “stakeholder capitalism” and do all we can to help those who are affected, and help secure our common prosperity.”
- “To employees, our principle is to keep you safe.”
- “To our ecosystem of suppliers and customers, our principle is to secure our shared business continuity.”
- “To our end consumers, our principle is to maintain fair prices and commercial terms for essential supplies.”
- “To governments and society, our principle is to offer our full support.”
- “To our shareholders, our principle remains the long-term viability of the company.”
Schroders on a New Social Contract
- “MSCI ESG Leaders indices have outperformed their mainstream counterparts in most geographies, albeit modestly in most instances.”
- “ESG leaders have so far seen smaller earnings per share (EPS) cuts than ESG laggards.”
- “Companies’ treatment of their customers, employees and suppliers is under greater scrutiny than ever before.”
- “It is reasonable to expect that companies that attract positive recognition will see greater loyalty from their staff and be more able to attract new recruits after the crisis.”
- “…could also see market share shift to companies that are deemed to have ‘done their bit’ during the crisis.”
- “As investors, our job remains the same: we focus on identifying those companies that have the best potential for sustainable growth over the long term, underpinned by strong relationships with their stakeholders.”
JUST Capital on what America’s 100 largest employers are doing amid the crisis
- “Many companies have already stepped up to support their workers, customers, and local communities. We’ve created the following tracker — starting with America’s 100 largest public employers — to help assess what’s happening on the ground, elevate best practices, and share what good looks like in this rapidly shifting landscape.”
- Only 7% of companies in this screening have announced layoffs.
- 64% have some kind of customer accommodations.
- 11% have announced executive pay cuts.
- “…This crisis reinforces the fact that sustainable development is the only way forward.”
- “We also see that companies are quick to adapt to taking measures that they were reluctant to take in the past.”
- “…in this situation we will be assessing on a case by case basis the prudence of companies when it comes to dividend payouts and share buybacks.”
- “We will also be critical of remuneration proposals for board members.”
- “When it comes to employees, we expect company responses to the coronavirus to be a proxy for their broader approach to human capital management.”
In local news, the President of Mexico’s Business Coordinating Council (Consejo Coordinador Empresarial) yesterday launched an initiative to face the economic contingency from COVID-19 with a national agreement between government, businessmen, employees, and the social security system to safeguard employment, set the base for recovery, avoid liquidity crunches in families, and source resources for social programs. To achieve this, several proposals are made for the next 3 months including some payment deferrals, liquidity support programs, investment programs, among others.
As can be seen, investors, companies, and associations that take their position and the responsibility it entails seriously (and of course have the ability to do it) consider the implications for all their stakeholders of all their actions through good times and bad times. We believe this will be key for the long term success of all of these relationships.
Hope this was of use. As usual, if there is anything we can help you with, please reach out. Also, don’t forget to recommend any ESG subject matter that you would like us to research and put in a forthcoming weekly.
Partner, Miranda ESG
This week’s recommended reading
- Letter: Perhaps the new alpha mantra should be ESG materiality
- COVID-19 demonstrates the need to address ESG risks in supply chains
- Corporate governance has fundamental role in times of crisis, specialist says
- Big data shows Covid-19 reshaping ESG; UN PRI’s long-term crisis plan; sustainable funds stand tall
- ESG Stock Resilience Is Paving the Way for a Surge in Popularity
Contacts in Miranda Partners